Interview with Guglielmo Baeli on the oil and gas sector

Guglielmo Baeli

Guglielmo Baeli shared his views and opinions with the GSEW team about the future trends in the oil and gas sector.

Mr. Baeli is a civil engineer with over 20 years of engineering and construction experience in oil and gas sector, civil and industrial sector, major public transport infrastructur, renewables, water treatments, and gathering systems.

He has vast experience in site supervision, accountancy, tendering and evaluation. Mr. Baeli is an expert in the field of construction methods and construction sequences above or below the ground.

Interview transcript

1. HOW WOULD YOU DESCRIBE THE FUTURE TRENDS THAT MIGHT RESHAPE THE O&G INDUSTRY IN THE NEXT DECADE?

In the latter part of the year and in the ones to come, the oil and gas sector is experimenting what can be defined as an economic recovery. In recent years, investments have stagnated and now this recovery will allow big players to reinvest resources. Moreover, a great deal of the activity in the oil and gas sector is focused on OPEC countries and the U.S., but other regions may also play a key role in the coming years.

Oil and gas can be considered as a traditional sector, it has reacted in a rather different way than other industries to the on-going digital transformation. Only in recent times, we witnessed to the first analysis about the digitalization in O&G. However, it is remarkable that this phenomenon is growing sharply. The United States is where this process is increasing and where the major players are starting with important investments.

2. DO YOU BELIEVE THE ONGOING DIGITAL TRANSFORMATION WILL MOSTLY AFFECT THE VALUE CHAIN OR RATHER FINAL PRODUCTS?

The digital transformation will affect mostly some segments of the value chain in this specific sector. In my opinion, in the short and medium term, we cannot expect a radical and dramatic change in the trend. For the time being, final products are not at the heart of this transformation.

On the other hand, the value chain will considerably benefit from the digitalization. Production processes – from exploration to distribution – will become safer and more efficient. In this respect, big players are increasing their efforts and investments.

3. WHAT COULD BE THE MOST PROMISING AREAS ENABLING INNOVATIVE SOLUTIONS?

Talking about innovation, I think that drilling and exploration are the most interesting areas. These areas are at the cornerstone of Oil & Gas, where industries are investing efforts and resources to develop new solutions. This applies to the short-medium term.

The same reasoning cannot be applied to the long-term. In this context, the discussion is more focused on which types of resources will be utilized and exploited. We should have a different approach if we talk about new energies and the utilization of renewables.

The debate is still open on this topic: according to relevant analyses, investment and improved recovery techniques have already extended the life cycle and productivity of the oilfields. Therefore, I think that we should wait for 20/30 years to see major changes.

4. BY THE SAME TOKEN, DO YOU BELIEVE A MAJOR ROLE WOULD BE PLAYED BY TRADITIONAL PRIMES (e.g. BIG Oil & Gas) ?

OR DO YOU THINK A DISTRUPTIVE TRANSFORMATION COULD BE BROUGHT BY NEW ACTORS?

I do not think we will be able to see new important players, over the coming years.

The O&G market has significant entry barriers for potential new players due to the amount of the initial investment and the relevant know-how. Therefore, even the digital transformation – which is reshaping the market of other industrial sectors– is not easily allowing new actors to play a relevant role.

However, we can notice some exceptions. In this regard I am thinking mainly about large and important actors usually operating in other sectors that eventually decide to concentrate part of their efforts in Oil & Gas. An example is given by Kawasaki, the popular automotive manufacturer started to invest in energy power plants.

Thus, it is improbable to find a place for new players , such as start-ups, that can hardly bear the costs for developing new business in traditional O&G market.

5. DO YOU THINK CROSS-FERTILISATION COULD BE AN ASSET IN ACHIEVING A MORE SUSTAINABLE AND LONG-LASTING PROGRESS?

It is important to take into account the economic factor while analysing the O&G sector. O&G industries concentrate their efforts on core business activities, the crude oil production. Sometimes, primes tend to diversify their investments, especially towards more disruptive and impactful activities enabling a closer engagement of the general public.

The final goal of R&D drivers is indeed to contain the production costs which are generally entirely charged on the final consumer.